'Bandhan' emerges top job creator

There is no denying the fact that Chandra Sekhar Ghosh, the effervescent founder-managing director of one of India's youngest banks (and the first to come up in eastern India in the post-Independence era) learnt a lot from his stint with BRAC, Bangladesh, in the formative years. In later years also, Ghosh kept on picking up a lesson or two from the BRAC experience.

And now as BRAC's legendary founder chairman Late Sir Fazle Hasan Abed looked back and looked at Bandhan, he minced no word in appreciating his protégé's acumen in spotting the right talent for the right job. "I have always seen that Ghosh has this incredible ability to identify the right man for the right job and then utilizing him/her to the fullest. His man management skills have been outstanding. Chandrasekhar and his organization-Bandhan could become what they are today because of this, among others," said Sir Abed, during one of his last interactions with the author.

Even in the post-Covid period or during the lockdown period, this young bank is driving home more points than one to justify why it is different.

Let us look at a few facts first. Bandhan Bank was incorporated on December 23, 2014 as a wholly owned subsidiary of Bandhan Financial Holdings Ltd. It received in-principle approval of the RBI for setting up a universal bank in April, 2014 and the final nod in June, 2015. On August 23, 2015 it started its banking operations as one of the two new banks in the country, following RBI's final nod. But more importantly, it happened to be the first bank to be set up in eastern India after Independence. Its shareholders include IFC, FIG Investment Company, SIDBI, Caladium Investment Plc.

Mind you that, much before the process of giving new banking licenses had begun, Bandhan, the erstwhile largest MFI in the country, had started ground work for banking operations much earlier. When in January, 2011, International Finance Corporation (IFC) had chipped in $35 million (nearly Rs 160 crore) by way of equity in Bandhan Financial Services Pvt Ltd, latter's networth went up from Rs 350 crore to close to Rs 510 crore, placing one of India's largest MFIs on a much stronger footing to seek banking license. It then started focusing on continuous training of its employees through training centers, leadership development institute and improving operational efficiency with the help of trained manpower and adoption of technology. It has paid off.

Hold your breath! This may not tell you the whole story. As recently as on July 7, this year, Bandhan Bank put out its Q1 update. Advances grew to Rs 74,325 crore as against Rs 63,164 crore YoY and Rs 71,846 crore QoQ. Advances grew at 18 per cent YoY and 3 per cent QoQ. Deposits came in at Rs 60,602 crore compared to Rs 44,796 crore YoY and Rs 57,082 crore QoQ. Deposits grew at 35 per cent YoY and 6 per cent QoQ. Retail deposits as a percentage of the total deposits was stable at 78 per cent. The CASA ratio came in at 37.1 per cent vs 34.1 per cent YoY and 36.8 per cent QoQ. Micro banking deposits came in at 5.1 per cent vs 6.2 per cent YoY and 5.7 per cent QoQ. The moratorium availing customers at Bandhan Bank has also come down to 30 per cent from the early nearly 100 per cent. Collection efficiency has thus seen a 70 per cent improvement.

Little wonder therefore that investors lapped these up and shares of Bandhan Bank jumped as much as 12.6 per cent to Rs 401.95 on the BSE on July 7 after the bank reported this performance despite the lockdown in force.

"Subsequent to Unlock 1, the collection in Micro Banking loan vertical has shown positive traction from June 01, 2020. There has been steady improvement in collection efficiency (in value terms) during the month of June, 2020 and ended with 68 per cent as on June 30, 2020. This number has further improved to 70 per cent (resulting in effective moratorium of 30 per cent) as on July 03, 2020. Nearly 70 per cent of customers have started repaying their loans," explains the bank.

For record, the collection efficiency for non-micro banking advances for the month of June, 2020 stands at 84 per cent (resulting in effective moratorium of 16 per cent). Interestingly, Bandhan Bank has reported improved collection efficiency in the first quarter of this fiscal for both micro-banking and non-micro banking advances. The Reserve Bank of India (RBI) has also extended the benefit of moratorium on loan repayment until August for borrowers in distress.

If analyst firm like Motilal Oswal Financial Services is to be believed, Bandhan Bank has created Covid-19-related provisions of Rs 690 crore to deal with higher delinquencies in the near term. And LGD should remain lower (v/s that of peers) due to Bandhan's strong market share and higher unique customer base.

However, the founder of the bank, Ghosh has left no stone unturned to ensure that Bandhan Bank, emerges as one of the top job creators even in challenging conditions, helping lift the pall of gloom in the job market.

The bank is driven by the mantra: "AapkaBhala, SabkiBhalai". Therefore, the overall negative hiring sentiments notwithstanding, Bandhan Bank has hired 2,500 people for its micro banking vertical with the lockdown restrictions being eased, while it is in the process of adding another 500 by the end of June.

Ghosh founded Bandhan Bank with a vision to be a world class bank for convenient and affordable financial solutions to all, in an inclusive and sustainable manner. He set out on this challenging journey with the mission to provide the customers accessible, simple, cost-effective and innovative financial solutions in a courteous and responsible manner and to create value for all stakeholders through a committed team, robust policies and superior systems and technology. That mission is yet to be accomplished completely.

But it has been a dream run so far. "We continue to remain in the small loan space as that's our strength and there is no end to the demand for small loans. From serving the bottom of the pyramid, we are gradually inching up, serving the SMEs," says Ghosh. And going by one of the bank's recent campaigns, the new focus looks to be on small and medium business owners/ budding entrepreneurs in the age group of 25-45 years that are looking for a low- to medium-ticket loan for their businesses. Ghosh minces no word in admitting that there is a vast market and opportunities are endless. "We will be with and by their side, handhold them.

He finds the new banking landscape to be very interesting. Explains Ghosh: "What we are watching is a conundrum, to use a cliché. While public sector banks are losing their market share, newer banks of different shapes and sizes are coming into play. The NBFCs are also growing handsomely. And overall, technology is changing the rules of the game very fast."

He thinks that there are three key challenges facing the industry – recognition and resolution of bad assets, credit off take and embracing technology as an enabler. And he loves taking challenges head on. For Ghosh, it's like a journey. For him, there is no destination; there is no end to dreaming.